Myth: If you have a good credit score you should have no problem obtaining additional credit.
Reality: Although having a good credit score can go a long way, it is not the be all and end all for obtaining additional credit. A credit score is basically a number that is determined by using super complicated algorithms that look at your credit activity. Much of this credit activity can also be found on your credit report. It’s a snapshot in time, expressed as a number.
The problem is a credit score does not capture things like: you income, your net worth, how long you’ve worked for a specific employer. It also doesn’t tell the lender whether you have filed and been discharged from bankruptcy.
A credit score can tell a lot, but it can never tell the whole story. This is why lenders pull up your credit report & score in addition to obtaining other supporting documentation like your income and notice of assessment/ tax return.
Solution: Work hard to maintain a good credit score, but also continue to grow your income and net worth. Keep at least 2 years of your tax return & notice of assessment on file with you at all times. This may be required for many loans. Lastly, if you owe money to Canadian Revenue (CRA), pay that off.
Tags: a lot of debt, bankruptcy, bankruptxy discharge, budget, Canadian Revenue Agency, Credit, credit report, Debt, debt journey, getting additional credit, goals, income, modest living, net worth, notice of assessment, planning, student debt, student loan, tax return